Monthly Archives: September 2011

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Mortgage rates continue to hold steady at record lows, encouraging many homeowners to take advantage of this opportunity to refinance their homes. While interest rates have never been better, there may be a few other things to consider as your refinance proceeds.

CNBC’s Courtney Reagan recently sat down on NBC’s The Today Show to give some advice on how homeowners can judge when the right time is to refinance, such as checking credit scores and considering multiple lenders.

This past Friday, Berman and Kandel’s own Deb Berman was featured in an NPR (National Public Radio) morning edition segment about the recent uptick in the real estate market.

According to NPR, “Rock-bottom home prices and record-low mortgage rates are tempting buyers back into the market. The National Association of Realtors says sales of existing homes rose nearly 19 percent last month over the previous year.”

I’m sure you’ve heard by now that it’s a buyer’s market. True–with no shortage of inventory, record low interest rates, and price tags that seem more reasonable now than they did a year ago, it is definitely a great time to be a buy.

But what you may not have heard (as much) is that now is also the perfect time to sell! If you are thinking of selling your home within the next 6 to 18 months, you may want to consider listing sooner rather than later. One of our favorite real estate blogs (and easily our most referenced), The KCM Blog, recently posted an article laying out 5 reasons why you should sell today (and why waiting may not be in your best interest)…

1. Your House Will Get More Exposure Now Than the Winter

The real estate market tends to get more action during summer and fall than during the winter, especially during the holidays. The market tends to level out during the summer, followed by a surge in action during the fall months. The KCM Crew points out that it’s not too late for your home to hit the market during the fall season, which has “consistently outperformed the winter season.”

2. Distressed Properties Will Impact Prices

Keep in mind that, “Distressed properties (foreclosures and short sales) on the market will increase this fall and winter. This will put tremendous downward pressure on prices for at least the next 12-18 months. Get your home sold before they become your competition.”

3. Mortgages Will Become More Difficult to Attain

With new legislation rolling out October 1 and even more legalities being considered, qualifying and obtaining a loan will likely become increasingly difficult. Demand for inventory will decline should buying start to slow. And when demand goes down, so do the prices.

4. It is the Perfect Time to Move-Up

Interested in trading up? Consider that, “With prices where they are and interest rates at all time lows, there may have never been a better time to move-up into your dream home. If you move into a more desirable home now, you will be in position to gain larger equity as prices eventually appreciate.”

5. You Get to Move On with Your Life

Most importantly, you shouldn’t let a not-quite perfect market keep you from living your life. Remember: “You are considering selling for a reason. Do not allow a less-than-stellar housing market prevent you from reaching your goals as an individual or as a family. Think about the reasons you are thinking about moving. Are these reasons really important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the dollar difference in sales price worth putting off our plans? Only you and your family know the answer to that question.”

For most, buying a home will probably be one of the biggest purchases you’ll make. It’s an investment in your future and, as such, you may decide to protect your investment with homeowner’s insurance. Realtytimes.com contributor, Carla Hill, recently posted an article to help buyers and homeowners navigate the basics of homeowner’s insurance.

Hill explains, “As a renter you may have been required to carry ‘renter’s insurance,’ which was likely a basic plan that covered property losses and damages in case of an accident at which you were at fault, such as fire. A homeowners policy has to cover so much more. Your possessions now extend on past jewelry and electronics and must protect everything from shingles and flooring to your life savings.”

Homeowner’s insurance is designed to provide you broad coverage against damage or losses that occur when owning a home. Generally coverage would extend to things like theft, vandalism, damage to personal property, and liability insurance in case of injury to another person or their property. It can also protect you against damages incurred from fire, tornado, or other natural disasters.

So to protect yourself, you opt to pay a yearly premium for homeowners insurance. The amount you pay is figured based on a number of factors, including your home’s value and location. Local economy, environmental influences, crime rates, etc. are all taken into consideration.

Hill advises: “Be sure to ask your insurance provider for the specifics of what your policy covers. You want a policy that gives you the right amount of coverage. Ask about add-ons, such a flood and earthquake policies. According to Allstate Insurance, ‘Typically, floods and earthquakes are excluded from basic policies, but in some areas, you may be able to get supplemental insurance policies for those situations. A few other conditions most companies specifically exclude are mold, fungus, wet rot, dry rot and bacteria.'”

Accidents happen and you want to make sure you’re protected when or if they do. You don’t want to be caught off guard should someone become injured on your property, especially if they decide to take legal action.

In the event that you need to file a claim, expect to pay a deductible. Say for example, your home is damaged in a fire. Keep in mind that, “To cover not only your property losses in this fire, but also your possession, you will need to have proof of what you had. A home has been recorded on the tax roll, but possessions are your own private property. Homeowners should create an itemized list, updated yearly, that gives evidence of what possessions they have and how much they’re worth. You want a policy that has replacement cost coverage, not just the present value. If you lose a mattress in the fire, it will cost you $1,000 to replace, not $50 (the price it might be worth now).” Photos or a video may be helpful in proving possession, copies of which should be stored in a safe location away from your home (i.e. a family member’s home, safety deposit box, or other secure location).

Many lenders require borrowers to carry a homeowner’s insurance policy, as a means of protection for the bank. Remember that, if you have a monthly mortgage payment, “You are not the ‘owner’ of your home until you have completed your loan obligations. Until that point, the bank or lender is the legal ‘owner.’ They want to be sure their investment is protected.”

Regardless of whether your home is mortgaged or owned outright, homeowners insurance is a smart way to protect yourself, your home, and the investment you’ve made in your future.

CNN Money recently ran an article about the real estate market’s brightest spot: the rental market. Demand is up and rent prices are rising and, “It’s partly because those foreclosures have turned more than 4 million former homeowners into renters, but also because many other prospective homeowners, worried about losing their jobs or housing prices falling a lot further still, are reluctant to buy now.” CNN put together their tips for figuring out whether or not investing in rental property is worthwhile for you and what exactly you need to know.

Why Now? According to the article, “Many factors make this a great time to invest. Mortgage rates are at a 40-year low, and homes in many areas are ultra-cheap. Meanwhile, demand for rentals has risen in more than 500 cities, according to recent Census data. That, in turn, has enabled landlords to charge more.”

Today’s average investor plans to hold on to their property for at least 10 years, according to the National Association of Realtors. Assuming you can hang on for that long, your chances at solid gains are good, especially if you are financing the purchase. The catch, however, is being able to hold on to the property for that long without needing to use the equity.

Financing may be tricky also. As CNN reports, “Most banks now require a down payment of at least 20% to 25% and evidence you have enough cash to cover six months’ worth of mortgage, tax, and insurance payments.”

How do you find a good deal? To start, it’s important to work with an agent experienced with rentals, someone who will be able to accurately assess how the property will fair in the rental market. Try to stick with investment properties that are close by and easily accessible to you, in a neighborhood that is familiar to you.

The experts at CNN Money point out that, “While prices on multifamily dwellings haven’t dropped as much as they have on single-family homes, don’t ignore plexes: Intake from a few rents instead of just one will boost your cash flow; a single vacancy won’t hurt as much; and you could benefit from economies of scale for things like appliances and painting.” Avoid stricter financing requirements, like a bigger down payment, by sticking to buildings with 4 units or less.

Once you’ve found potential income properties, make sure the numbers work out. You should make sure your rental income will at the very least cover your loan payments plus an additional 20% to cover any repairs, vacancies, property management, etc. The last thing you want is to be caught off guard by one empty month, so you should, “Assume your mortgage rate will be at least a half-point higher than rates on owner-occupied properties. Factor in insurance and property taxes, and bank on a 5% vacancy rate.”